Firms exist because they facilitate the efficient organization of factors of production.

Question

Quizplus · Accepted Answer

Firms exist because they can organize the production of goods and services in a way that reduces transaction costs, takes advantage of economies of scale, and efficiently coordinates the use of labor, capital, and raw materials. This organization leads to more efficient production compared to what could be achieved by individuals working independently.

Firms Exist Because They Facilitate the Efficient Organization of Factors